The ongoing budget crisis the state has faced since approving a spending plan in late June is full of big numbers and bigger confusion — namely how to pay for the already approved spending plan.
But it seems that maybe — hopefully — a solution is near.
Late on Sept. 13, the Republican-controlled state House of Representatives approved a revenue package proposal that, if approved by the Republican-controlled Senate and Democratic Gov. Tom Wolf, would end the state’s ongoing budget struggles for this fiscal year.
However, it’s not easy to just end a $2.2 billion deficit. The Associated Press identified it as Harrisburg’s “largest cash shortfall since the recession.”
It’s also the second time Wolf has faced a budget stalemate. The first in 2015 lasted nine months.
According to reports, an earlier plan the Senate passed in late July called for borrowing $1.25 billion, using the state’s Tobacco Settlement Fund as collateral, and increasing revenue by $500 million through the adjustment of existing taxes and a new natural gas tax. The recent House plan, meanwhile, calls for selling off future Tobacco Settlement Fund revenue for an immediate $1 billion in existing revenue, fund tranfers, expanding gaming throughout the state and the raiding of the state’s Join Underwriters Association fund, to the tune of $20 million.
Negotiations between the two chambers continued this week. But as the spectre of a credit downgrade loomed over the capital, Wolf’s office was warning that drastic cuts to existing programs would be necessary if the legislature failed to act.
In the Jewish community, there were several key concerns as for what would be in the offing — most prominently, funding for educational tax credit programs such as the Educational Improvement Tax Credit (EITC) and Opportunity Scholarship Tax Credit (OSTC). Many families of students of Jewish day schools rely on these programs to fund tuition breaks.
For now, the funding for these programs will remain the same at $175 million, with $125 million designated for EITC and $50 million toward OSTC.
If the House’s revenue package is passed, other tax credit programs would be reduced by 50 percent.
An additional $20 million for the EITC was proposed in an earlier version of the House bill, but it does not appear there now.
“They didn’t cut what the regular amount of EITC, OSTC funding is,” noted Robin Schatz, Jewish Federation of Greater Philadelphia director of government affairs. “That’s staying flat, as opposed to some of the other tax programs, which are all being cut about 50 percent.”
However, despite the victory of keeping EITC and OSTC funding sustained, Schatz is worried about the long-term effects of Pennsylvania’s continued budget battles.
“Our programs are protected — our EITC, OSTC — and it looks like the funding is going to stay the same for health and human services and human aging programs, which is something that we’re very interested in. So it’s not the worst,” she explained. “The big problem with this budget proposal is that it just continues to kick the can down the road, because this is like another one-shot deal to get the budget through, and there’s no provisions for what’s going to happen next year.”
She advised the community not to be complacent.
“There’s always cause for concern, and we have to always remain vigilant to make sure the needs of those most vulnerable in our communities are being met,” Schatz said. “Sometimes it’s just a matter of not just willy-nilly flashy programs or making reductions but looking at best-case practices, going to people to work in and meet with these programs, like JEVS Human Services, and letting these experts rather than just legislators talk about what works, what doesn’t work and where you can find real savings.”
She said it’s unclear what will happen and the best they can do is just wait and see. But she thinks there’s a good chance the House plan will pass — even though it isn’t necessarily what the Senate wants — as lawmakers are already behind schedule and it’s unlikely that they will want to push it further.
“Everyone’s kind tired of the budget to let it die at this point,” she said, “and I’m sure the Senate is not thrilled with this, but I would not be surprised if it passes.”
The Pennsylvania Jewish Coalition in Harrisburg has pushed to ensure the programs that support the Jewish community — like the tax credit programs — are protected.
“The PJC, in working with the Jewish Federations, have been very diligent in making sure that our programs are sustainable and funded as this budget process continues,” said Hank Butler, executive director of the PJC.
Of the atmosphere in Harrisburg, Butler added, “Everyone’s trying to work through a very tenuous situation.”
“The PJC is hopeful that state legislators can overcome their differences and put a budget in place that protects the most vulnerable members of our community,” added PJC Chairman Marc Zucker. “We’re grateful that the latest House version of the budget retains funding for education tax credits, food pantries, human service programs and aging in place programs, all of which are really so important for the well-being of the Jewish community in particular, and the citizens of the commonwealth as a whole.”
For Arielle Frankston-Morris, director of Teach PA, a project of the Orthodox Union, keeping the EITC and OSTC funding stagnant — as of now — was a “victory.”
“In this climate, in this deficit landscape, that’s a huge, huge victory, and we really appreciate legislative leadership and rank and file who support this,” she said. “There have been a lot of ups and downs in the past couple of months with the House wanting to increase it by $20 million and then not and then yes.
“Our schools should be happy and appreciative and never take any of these programs for granted,” she added. “We can never sit still and just think that next year the budget process will be smooth and that what we had last year is to be expected again because we see other programs that they get cut … but it’s also not over yet.
“We will have to see and we have to stick with it and stay in it and stay connected with what’s going on in Harrisburg and the local legislators.”
In the spending plan that was approved in June, school security funding — another issue that Teach PA had been pushing for — was appropriated. They’re waiting to see what happens in a final deal.
“Some of the items that are approved in the spending plan, they can’t be released yet even though they were approved in that plan,” Frankston-Morris said, “so we’re being told that the school grant, the safety grants, the awards won’t go out until the governor allows them to, and he might not allow some of these programs to kind of start running for this year until there’s a finalized budget.”
In the meantime, she thanked legislators for their commitment to the program.
“We’re really happy and appreciative that despite this budget hole, this deficit that we’re facing, that EITC continues to be a program that is supported across the aisle,” she said.
Ellen Horowitz Matz, director of education tax credit programs for the Foundation for Jewish Day Schools (FJDS) — created by the Jewish Federation of Greater Philadelphia in partnership with regional Jewish day schools — echoed Frankston-Morris’ happiness.
“There have been some side bills or some conversations about increasing it, but it seems that due to other critical budget issues — you know how it goes. They look at all the issues in front of them and have to make some decisions,” she said. “For the moment, though, the fact that EITC and OSTC is remaining intact, we are very pleased because the legislature overall has been a very strong supporter of this vital program.”
“We’re appreciative of the governor and the House and Senate supporting the program to provide so many needy students with a chance to get an education of their choice,” FJDS Chairman Elliot Holtz added.